Mumbai: Religare Enterprises Ltd (REL) may have to borrow money to repay Rs155 crore worth of debt and interest due on 30 June since the company is temporarily short of cash, India Ratings and Research said on Monday.
The company may raise short-term bank loans or commercial papers to meet the immediate payouts, the ratings agency added.
The company expects to receive the proceeds of a stake sale in its health insurance unit, which was announced in April, in the near to medium term, which would provide comfort to the liquidity situation.
“To meet and fulfil immediate funding requirements, REL is looking at short-term bank loans and other suitable options," a Religare spokesperson said in an e-mail.
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As a holding company, REL has depended upon cash receipts in the form of dividends from the key operating subsidiary, Religare Finvest Ltd, but the latter was unable to provide dividends to REL in fiscal year 2017 due to higher credit write-offs.
India Ratings pointed out that during fiscal years 2016 and 2017, REL had realized funds from stake sales in various key businesses such as its life insurance business, a domestic asset management company and a global asset management company.
The company has significantly brought down its external debt in the last couple of years by utilizing money raised from the sale of businesses, the ratings agency said, adding the lower external debt outstanding, which forms just 18% of total debt, provides REL with the buffer to raise additional debt.